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Stocks rise, a day after disappointing forecast from Fed triggers sell-off
U.S. stocks are stabilizing Thursday following one of their worst days of the year.
The S&P 500 rose 0.4% in morning trading, a day after tumbling 2.9% when the Federal Reserve said it may deliver fewer cuts to interest rates next year than earlier thought. The Dow Jones Industrial Average was up 194 points, or 0.5%, as of 10:05 a.m. Eastern time, following Wednesday’s drop of more than 1,100 points. The Nasdaq composite rose 0.5%.
Indexes are still near their records, and the S&P 500 is still on track for one of its best years of the millennium. Wednesday’s drop just took some of the enthusiasm out of the market, which critics had already been warning was overly buoyant and would need everything to go correctly for it to justify its high prices.
Traders are now expecting the Federal Reserve to deliver just one or maybe two cuts to interest rates next year, according to data from CME Group. A month ago, the majority saw at least two cuts in 2025 as a safe bet. Wall Street loves lower interest rates because they give the economy a boost and goose prices for investments, but they can also provide fuel for inflation.
Darden Restaurants, the company behind Olive Garden and other chains, helped lift the market Thursday after leaping 13.4%. It delivered profit for the latest quarter that edged past analysts’ expectations. The operator of LongHorn Steakhouses also gave a forecast for revenue for this fiscal year that topped analysts’.
Accenture rose 6.5% after the consulting company topped expectations for profit in the latest quarter. CEO Julie Sweet said it saw growth around the world, and the company raised its forecast for revenue this fiscal year.
Amazon shares added 1.6%, even as workers at seven of its facilities went on strike Thursday, right in the middle of the online retail giant’s busiest time of the year. Amazon says it doesn’t expect an impact on its operations during what the workers’ union calls the largest strike against the company in U.S. history.
They helped offset a tumble for Micron Technology, which fell 17.4% despite reporting stronger profit than expected. The computer memory company’s revenue fell short of Wall Street’s forecasts, and CEO Sanjay Mehrotra said it expects demand from consumers to remain weaker in the near term. It gave a forecast for revenue in the current quarter that was well short of what analysts were thinking.
Lamb Weston, which makes French fries and other potato products, dropped 19.1% after falling short of analysts’ expectations for profit and revenue in the latest quarter. It also cut its financial targets for the fiscal year, saying demand for frozen potatoes is continuing to soften, particularly outside North America. The company replaced its chief executive.
In the bond market, yields were mixed a day after shooting higher on expectations that the Fed would deliver fewer cuts to rates in 2025. Reports on the U.S. economy came in mixed.
One showed the overall economy grew at a 3.1% annualized rate during the summer, faster than earlier thought. The economy has remained remarkably resilient even though the Fed held its main interest rate at a two-decade high for a while before beginning to cut them in September.
A separate report showed fewer U.S. workers applied for unemployment benefits last week, an indication that the job market also remains solid. But a third report said manufacturing in the mid-Atlantic region is unexpectedly contracting again despite economists’ expectations for growth.
The yield on the 10-year Treasury rose to 4.56% from from 4.52% late Wednesday and from less than 4.20% earlier this month.
But the two-year yield, which more closely tracks expectations for action by the Fed in the near term, edged back to 4.31% from 4.35%.
The rise in longer-term yields has put pressure on the housing market by keeping mortgage rates higher. Homebuilder Lennar fell 4.6% after it reported weaker profit and revenue for the latest quarter than analysts expected.
CEO Stuart Miller said that “the housing market that appeared to be improving as the Fed cut short-term interest rates, proved to be far more challenging as mortgage rates rose” through the quarter.
“Even while demand remained strong, and the chronic supply shortage continued to drive the market, our results were driven by affordability limitations from higher interest rates,” he said.
In stock markets abroad, London’s FTSE 100 fell 1.2% after the Bank of England paused its cuts to rates and kept its main interest rate unchanged on Thursday. The move comes as inflation there moved further above the central bank’s 2% target rate, while the British economy is flatlining at best.
The Bank of Japan also kept its benchmark interest rate unchanged, and Tokyo’s Nikkei 225 fell 0.7%. Indexes also sank across much of the rest of Asia and Europe.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
CBS News
Biden’s top hostage envoy Roger Carstens in Syria to ask for help in finding Austin Tice
Roger Carstens, the Biden administration’s top official for freeing Americans held overseas, on Friday arrived in Damascus, Syria, for a high-risk mission: making the first known face-to-face contact with the caretaker government and asking for help finding missing American journalist Austin Tice.
Tice was kidnapped in Syria 12 years ago during the civil war and brutal reign of now-deposed Syrian dictator Bashar al-Assad. For years, U.S. officials have said they do not know with certainty whether Tice is still alive, where he is being held or by whom.
The State Department’s top diplomat for the Middle East, Barbara Leaf, assistant secretary of state for Near Eastern Affairs, accompanied Carstens to Damascus as a gesture of broader outreach to Hay’at Tahrir al-Sham, known as HTS, the rebel group that recently overthrew Assad’s regime and is emerging as a leading power.
Near East Senior Adviser Daniel Rubinstein was also with the delegation. They are the first American diplomats to visit Damascus in over a decade, according to a State Department spokesperson.
They plan to meet with HTS representatives to discuss transition principles endorsed by the U.S. and regional partners in Aqaba, Jordan, the spokesperson said. Secretary of State Antony Blinken traveled to Aqaba last week to meet with Middle East leaders and discuss the situation in Syria.
While finding and freeing Tice and other American citizens who disappeared under the Assad regime is the ultimate goal, U.S. officials are downplaying expectations of a breakthrough on this trip. Multiple sources told CBS News that Carstens and Leaf’s intent is to convey U.S. interests to senior HTS leaders, and learn anything they can about Tice.
Rubinstein will lead the U.S. diplomacy in Syria, engaging directly with the Syrian people and key parties in Syria, the State Department spokesperson added.
Diplomatic outreach to HTS comes in a volatile, war-torn region at an uncertain moment. Two sources even compared the potential danger to the expeditionary diplomacy practiced by the late U.S. Ambassador Christopher Stevens, who led outreach to rebels in Benghazi, Libya, in 2012 and was killed in a terrorist attack on a U.S. diplomatic compound and intelligence post.
U.S. special operations forces known as JSOC provided security for the delegation as they traveled by vehicle across the Jordanian border and on the road to Damascus. The convoy was given assurances by HTS that it would be granted safe passage while in Syria, but there remains a threat of attacks by other terrorist groups, including ISIS.
CBS News withheld publication of this story for security concerns at the State Department’s request.
Sending high-level American diplomats to Damascus represents a significant step in reopening U.S.-Syria relations following the fall of the Assad regime less than two weeks ago. Operations at the U.S. embassy in Damascus have been suspended since 2012, shortly after the Assad regime brutally repressed an uprising that became a 14-year civil war and spawned 13 million Syrians to flee the country in one of the largest humanitarian disasters in the world.
The U.S. formally designated HTS, which had ties to al Qaeda, as a foreign terrorist organization in 2018. Its leader, Mohammed al Jolani, was designated as a terrorist by the US in 2013 and prior to that served time in a US prison in Iraq.
Since toppling Assad, HTS has publicly signaled interest in a new more moderate trajectory. Al Jolani even shed his nom de guerre and now uses his legal name, Ahmed al-Sharaa.
U.S. sanctions on HTS linked to those terrorist designations complicate outreach somewhat, but they haven’t prevented American officials from making direct contact with HTS at the direction of President Biden. Blinken recently confirmed that U.S. officials were in touch with HTS representatives prior to Carstens and Leaf’s visit.
“We’ve heard positive statements coming from Mr. Jolani, the leader of HTS,” Blinken told Bloomberg News on Thursday. “But what everyone is focused on is what’s actually happening on the ground, what are they doing? Are they working to build a transition in Syria that brings everyone in?”
In that same interview, Blinken also seemed to dangle the possibility that the U.S. could help lift sanctions on HTS and its leader imposed by the United Nations, if HTS builds what he called an inclusive nonsectarian government and eventually holds elections. The Biden administration is not expected to lift the U.S. terrorist designation before the end of the president’s term on January 20th.
Pentagon spokesperson Pat Ryder disclosed Thursday that the U.S. currently has approximately 2,000 US troops inside of Syria as part of the mission to defeat ISIS, a far higher number than the 900 troops the Biden administration had previously acknowledged. There are at least five U.S. military bases in the north and south of the country.
The Biden administration is concerned that thousands of ISIS prisoners held at a camp known as al-Hol could be freed. It is currently guarded by the Syrian Democratic forces, Kurdish allies of the U.S. who are wary of the newly-powerful HTS. The situation on the ground is rapidly changing since Russia and Iran withdrew military support from the Assad regime, which has reset the balance of power. Turkey, which has been a sometimes problematic U.S. ally, has been a conduit to HTS and is emerging as a power broker.
A high-risk mission like this is unusual for the typically risk averse Biden administration, which has exercised consistently restrained diplomacy. Blinken approved Carstens and Leaf’s trip and relevant congressional leaders were briefed on it days ago.
“I think it’s important to have direct communication, it’s important to speak as clearly as possible, to listen, to make sure that we understand as best we can where they’re going and where they want to go,” Blinken said Thursday.
At a news conference in Moscow Thursday, Russian President Vladimir Putin said he had not yet met with Assad, who fled to Russia when his regime fell earlier this month. Putin added that he would ask Assad about Austin Tice when they do meet.
Tice, a Marine Corps veteran, worked for multiple news organizations including CBS News.
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Delivering Tomorrow: talabat’s Evolution in the Middle East
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